Many home owners have the need for extra cash to complete home improvement projects, pay for kids college or consolidate credit card debt. Many times these home owners wonder what option is better a traditional refinance vs home equity loan.
Refinance vs Home Equity
- Home equity loans offer a great way to tap the equity in your home and turn it into cash without having to do a full fledged refinance or pay the high closing costs that are associated with them.
- Home equity loans are available as lines of credit and also normal loans. The home equity loan will function just like a standard mortgage. You close the loans, get your cash and make monthly payments to pay it off.
- A HELOC or home equity line of credit functions like a credit card. You have a line of credit that you can use for what ever you chose and you spend it as yo need it. Many HELOC also allow you to pay on the interest only making your payments less expensive.
- The only drawback to these types of loans is they do not offer the best refinance home mortgage loans rate when compared to a traditional mortgage.
Standard Mortgage Refinance
- The standard mortgage refinance will also allow you to tap the equity in your home and turn it into cash. It will offer the best refinance home mortgage loans rate and also give you terms up to 30 years.
- It does have much higher closing costs associated with it but often times they can be rolled right into the loan reducing out of pocket costs. These loans are typically used for large cash requirements